EY and Microsoft announce royalties blockchain

Yesterday EY and Microsoft announced a solution for managing content rights and royalties, initially for gaming. However, the system is designed to deal with royalties of any type, whether it’s movies, songs or books.

The problem

Games companies that publish games on Xbox Live enter into licensing agreements with Microsoft. Microsoft provides sales reports to publishers, but currently that could take up to 45 days or more.

By writing the transactions to a blockchain transparency is improved, and publishers can access data almost in real-time. Furthermore, there’s a reduction in the time taken to reconcile royalties between Microsoft and the publisher.

How it works

Publishers and distributors sign in and agree on terms which the system encodes into a smart contract. As consumers buy content, the system records the transactions on a blockchain’s ledger. Hence publishers can review the reports about transaction volumes on the system.

Paul Brody, Head of Blockchain Innovation at EY spoke to Bloomberg. He said they’re able to take out two-thirds of the cost of managing a rights and royalty system. Furthermore, the system shortens the time taken to inform publishers about royalty earnings by up to 99%.

Grace Lao, General Manager of Finance Operations, Microsoft, says: “Deploying this blockchain solution will allow us to efficiently manage high volumes and automate processes, while at the same time improve partner satisfaction and enhance compliance. Smart contract technology is far more flexible and scalable than any prior solution for managing business agreements.”

Microsoft is working with games publisher UbiSoft to test the system before it phases it in for other publishers. Once the system is fully operational EY and Microsoft anticipate the system supporting millions of transactions a day.

Technology

This scale of transactions would make it one of the largest blockchains in the world. The technology uses Microsoft Azure and the Quorum blockchain which is based on Ethereum. Quorum avoids the scaling issues that hamper Ethereum because it doesn’t use the energy-hungry proof of work consensus mechanism.

Other intellectual property blockchains

The EY Microsoft project is not the same as other projects, but there is a crossover. It’s the emphasis on the royalty management that is a little different.

Koch Industries is also working on an IP management system. Royalties are relevant for them, but their focus is more about showing the history of how IP is licensed. In some ways, it’s more like an IP provenance system.

Another example is the ACCORD legal industry consortium. In their case, the emphasis is on the process of creating contracts. They’re working on a set of templates for smart legal contracts to store them on a blockchain.

These are by no means the only IP projects, but the EY/Microsoft announcement is the largest to date.